Application Martin No: gr9902 Jones Contents

Clause 20 Imbalance trading

Origin submitted that if FT users’ nomination times move to later in the day, the time at which imbalance Trades may be made under clause 20.1(a) should move as well from 1030 hours to 1500 hours.³⁷⁹

Origin agrees with the Draft Decision’s proposed amendment A3.17,³⁸⁰ which provided:

For the access arrangement to be approved, clause 20.2(b) must be amended so that it is clear that the charge applies to the outstanding excess imbalance, i.e., to that imbalance outstanding after any and all exchanges or trades have been made.

Osborne submitted that intra-day trading should be permitted among users.³⁸¹ Osborne submitted that this would cause no material impact on the service provider.³⁸²

Epic indicated that it will amend its access arrangement to reflect the proposed amendment A3.17.³⁸³ Epic has made this change.

Commission’s considerations

Imbalance trading must be notified by the user to the service provider by 1030 hours on the day prior to the exchange. In the Commission’s view, such a notification period will diminish the suitability of imbalance trading for clearing excess imbalance. For example, if an excess imbalance arises on day one, the service provider must notify the user by 0900 hours on day two (19.2 (a)). The user must have arranged an imbalance trade by 1030 hours and have notified the service provider. The imbalance trade will then take place on day three. Under this timing the user would incur an excess imbalance charge for day one and day two before the imbalance is traded on day three.

The Commission accepts Origin’s submission if FT users’ nomination times move back, the time at which imbalance trades may be made under clause 20.1(a) should move back as well. As discussed in relation to clause 18, the issue of nomination times is related to the issue of whether FT and IT nominations could be made simultaneously. Since the Commission has decided not to change FT nomination times, it is not appropriate to change the time by which imbalance trades must be made.

In relation to the issue of intra-day imbalance trading, the Commission considers that the amendments to clause 19 in relation to the imbalance charge will address users’ concerns in this regard.

Clause 21 Allocation of receipt point quantities

Origin submitted that the quantity of gas measured as having been supplied at the Receipt Point should be the same as the sum of the Confirmed Quantities.³⁸⁴ Origin submitted that these quantities would only differ if the Producers and Epic were using different measuring procedures at the same point.³⁸⁵

In response, Epic submitted that clause 21 represents a default procedure, which will apply unless all users and the supplier of gas at the Receipt Point agree to another procedure.³⁸⁶ Epic indicated that if all users supply Epic with the agreed procedure, Epic would allocate in accordance with that procedure.³⁸⁷

Commission’s considerations

The Commission considers that the quantity of gas measured as having been supplied at the Receipt Point will equal the sum of the Confirmed Quantities at that Receipt Point unless either there is an error of measurement, or the Producers and Epic are using different measuring procedures. Although either of these situations might be unlikely to arise, it is reasonable to include clause 21 in the access arrangement in case such a situation does arise.

In its Draft Decision, the Commission required Epic to amend clause 21 in accordance with its proposed lodgement of 2 March 2000. Epic has made this amendment. Clause 21 as amended provides that users and producers can agree to different allocation procedures at receipt points.

Clause 22 Allocation of delivery point quantities

Origin submits that allocation at delivery points should not be based on meter readings downstream of a delivery point, because:

• 
  many downstream meters are incompatible with daily measurement;
  
• 
  downstream meters do not and should not conform with Schedule 8; and
  
• 
  unaccounted for gas in downstream systems must be considered in the allocation of flows and is not determined daily.³⁸⁸
  

Origin also submitted that users should not be obliged to provide Epic with customers’ metering data, as such data is confidential.³⁸⁹

Origin submits that users should advise Epic as to the allocation procedure at a particular Delivery point.³⁹⁰ Origin argues that any allocation procedure that allocates 100 per cent of gas to users should be acceptable to Epic. However, any dispute as to apportionment procedure should be referred to an independent expert, rather than being settled unilaterally by Epic.³⁹¹ It suggests that Epic would not resolve such a dispute impartially, instead it would impose whichever apportionment procedure best suits its commercial interest.³⁹²

Origin acknowledges concerns raised by the Commission in its Draft Decision that existing users could frustrate a new user’s access to the pipeline system by refusing to agree to an apportionment procedure.³⁹³ Origin submits that such conduct would constitute hindering or preventing access under s.13 of the GPAL.³⁹⁴

In relation to the issue of whether there would be (real time) unmetered facilities in distribution systems, the OEP states that this issue is currently being addressed by the Technical Regulator's distribution licence conditions in the requirement for a Network Consumer Code.³⁹⁵ It will be a requirement of this Code to have in place an agreed apportionment and balancing system for all gas entering a distribution system (from a transmission system such as Epic's).³⁹⁶

Origin expressed concern that the procedure for allocation of quantities at Delivery points is unworkable. Epic acknowledges Origin’s concerns, and stated that it is considering introducing an alternative allocation procedure under which parties taking delivery of gas at a Delivery point agree to the allocation procedure.³⁹⁷ Epic indicated that in the absence of such agreement, it would allocate deliveries to the parties at the Delivery point pro rata based on their respective nominations at the Delivery point.³⁹⁸

In relation to Origin’s submission that users should not be obliged to provide Epic with customers’ metering data, Epic submits that if a user has multiple customers, that user will aggregate metering information unless it wishes it to be incorporated in the allocation procedure.³⁹⁹